July 2024
As more condominium communities implement large special assessments to pay higher expenses, more condo owners will be forced to sell and move.
Many clearly benefit during the first fifteen years of a condominium building’s life when condo fees are too low. When repairs and other expenses begin to increase after about fifteen years, and peak after 30 years, those living in the building at the time pay the cost. If building infrastructure is allowed to worsen for another ten years, the situation worsens.
One 40-year-old condominium community faced a special assessment of between $15,000 and nearly $30,000 depending on unit size. The assessment was passed on May 15 with half to be paid by June 30th and the full balance due on July 31st. The same notice explained that monthly fees would nearly triple. Up to 70 percent of owners are expected to move out within six months. Those unable or unwilling to sell and move, and unable to pay will be faced with additional costs. Condo fees had not been increased to match rising costs, leading to a staggering $17 million shortfall in reserve fund funding. Owners “failed” to notice the shortfall of funds in their corporation’s accounts over many years. The consequences of underfunding have caught up with the need for maintenance and repairs for this community. Owners are working on recalling current directors which will do nothing to resolve the current financial shortfall.
It is not surprising when monthly condo fees in these communities are substantially increased and a major special assessment is imposed. Many long-time owners are forced to move out and to sell their homes at a significant discount to compensate for these higher costs. Condo loans are appealing because so many find they are unable to obtain funds necessary to pay for a special assessment.
All this disruption is unnecessary and can be avoided by ensuring monthly condo fees are set at a level ensuring proper maintenance, repairs and system replacements are undertaken when they become necessary.
